Editorial : 22-05-2018

A 33% fall in gold imports in April helped contain the current
account deficit(अभाव/नुकसान). This
is welcome. But the decline at a time when the rupee is weakening against the
dollar is counter-intuitive(प्रतिद्वंद्वी
है). Indians have a penchant for the
yellow metal. And as the rupee depreciates(मूल्य कम
करना/वास्तविकता से कम अंदाज़ा करना), many
people would be expected to turn to gold for hedging(बचाव-व्यवस्था) of risks. However, much of the drop in gold imports is due
to the abnormally high demand, following government’s policy moves. Gold
demand, for example,

surged by 58% in April 2017 as the market stocked inventory(सूची) ahead of the goods and services tax (GST). Gold now
attracts GST. Prior to that, April 2016 saw a steep fall in demand due to
regulatory changes that the market reportedly found tough to absorb(खपाना/अवशोषित करना).The World Gold Council’s data shows only an average 1.9% annual
increase in net bullion imports during(दौरान/की अवधि में) 2012 to 2017. A break up of the data quarter-wise shows
that imports peaked to 362 billion tonnes in the second quarter of 2013,
posting an increase of 145% in the same period the previous year. But imports
fell sharply(तेज़ी से/ध्यान
से) in the subsequent(आगामी/बाद का) quarters after the government raised customs duties to curb
import and save foreign exchange. It rose in 2015, except in the third quarter,
only to decline again in all quarters of 2016. That year also saw a steep fall
in jewellery fabrication(निर्माण/गढ़ी गई
वस्तु).

The import surge in 2017 was on a lower base and, hence, made
the growth look a whole lot better. As world growth picks up and prices start
to rise and currencies turn volatile(अस्थिर/परिवर्तनशील), gold’s attraction rises. For India to see a counter-trend,
part of the explanation has to do with cash. Demonetisation hit gold purchases
in 2016, and remonetisation helped gold imports recover in 2017. The recent
cash crunch would have crimped gold buys and imports. Gold, too, must move to a
less-cash economy.